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Fed energy white paper, deregulation key

TIM PALMER: After launching its Asian century policy blueprint last month, the Government today released another white paper, this time on the future of Australia's energy sector.

The Resources Minister Martin Ferguson has launched the energy policy blueprint, setting out the case for a more efficient and competitive market-based approach.

He's arguing for deregulation so consumers have more choice to buy power when it's less expensive.

That could depend on smart metres, seen as the key to helping consumers do that.

The white paper also calls for privatisation.

The Federal Minister Martin Ferguson told Alexandra Kirk the aim is to have the cheapest energy and the most reliable system.

MARTIN FERGUSON: The system to date is working well. The question is, as the reports show, that there are further potential benefits from consumers by further competition in the system, and I must say the fully privatised and deregulated Victorian system is the leader in terms of proof in the pudding.

ALEXANDRA KIRK: What will be the cost to the nation's consumers if the Queensland and New South Wales governments hold out and don't privatise electricity assets?

MARTIN FERGUSON: It's not to me to lecture that states of New South Wales and Queensland. They own the assets. They have to make their own decisions over time.

They're the ones that are going to have to consider to potential benefits to consumers as evidenced by the performance of the Victorian system, and perhaps they should talk to Michael O'Brien, the Victorian Minister, and Premier Baillieu.

ALEXANDRA KIRK: Now you target retail price deregulation as a key to helping stop spiralling electricity costs. You're hoping to cut a deal with the states next month. Precisely what do you want them to agree to?

MARTIN FERGUSON: For whatever reason, states have refused to actually put this agreement in place over time. The last 12 months I've started to see a change in attitude.

New South Wales has actually accepted their requirement to actually test the market and see if there is sufficient competition to actually make the decision to lift the capping, the setting of prices, in accordance with the National Energy Agreement.

Each state will have to go through this process. We want them to sign up to it over time.

I am delighted at the decision of the New South Wales Government.

ALEXANDRA KIRK: You've talked a lot about smart metres being the way of the future. In Victoria, they're mandatory, but who pays?

MARTIN FERGUSON: Look, the smart metres rolled out in Victoria had its complications. The new Government has reviewed the roll out. They've now taken the consumers with them and they've started to win broad community support.

In the future, it mightn't be government that actually rolls out the smart metres, it might be the retail operators offering consumers, offering houses the opportunity to embrace a smart metre, to have more informed information in terms of the cost of energy on particular days to enable you to make choices of when you use energy at a particular point of the day.

We've got a community that wants to embrace every asset under the sun, from you know, air conditioners to wide screen televisions to the latest sound systems, et cetera. That's putting demand on the provision of energy for a small time of the year.

That can, in some ways, be inequitable and some poorer households could be subsidising those big household uses to the tune of about $300 per week - per year I should say, sorry.

So they're the type of things - opportunities to actually monitor your own use of energy and what is the cost of energy at a particular point of time.

Now in many ways, this is no different to the manner in which we have changed our attitude to the use of water because of the drought we went through over the previous 10 years. We had to re-educate ourselves that water is a scarce resource and it costs money.

Our job now is to make sure we review the system, create the levers which enable individual households and industry to reduce their costs, and there are a whole variety of factors raised in the energy white paper today that can be implemented over time. It is a roadmap.

ALEXANDRA KIRK: You've also warned that gas prices are on the rise and that there'll be a shortage on the east coast as new projects ramp up, so governments need to remove impediments to development.

The Greens, though, regard gas as a threat to affordable electricity in Australia.

Should you be giving the gas industry a leg up?

MARTIN FERGUSON: There'll only be a shortage of gas if we don't make the regulatory decisions to bring gas into the market.

Now in terms of the future nature of our energy mix, unlike the Greens, I don't seek to design it to suit my own personal ideological bent. The white paper is about a market system with the market to sort out the nature of the energy in the future whilst reducing emissions.

ALEXANDRA KIRK: Finally, on the mining tax, the Independent MP Rob Oakeshott says that the deal you did with the three big mining companies is a dud because it's yielded no mining tax in its first three months.

Is that the price Australians have to pay for getting the mining sector off the Government's case?

MARTIN FERGUSON: The independents and the Greens should be focussed on what I'm focussed on at the moment.

Given low commodity prices, keeping our minds open and keeping Australians employed - jobs, jobs, and more jobs for Australia.

It's about time the independents understood. That's what the community expects of me and that's what the community expects of them.